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July 13, 2018

$1.65-billion Aircraft deal: India to push for G2G pact with Japan

The long-pending deal involving purchase of 12
ShinMaywa US-2i Amphibious and Rescue (SAR) aircraft for $1.65 billion
is back on track with New Delhi expected to push for government to
government deal (G2G) in an effort to close the discussions before the
India-Japan annual summit to be held in September.

The long-pending deal involving purchase of 12 ShinMaywa US-2i
Amphibious and Rescue (SAR) aircraft for $1.65 billion is back on track
with New Delhi expected to push for government to government deal (G2G)
in an effort to close the discussions before the India-Japan annual
summit to be held in September. Talking to FE on condition of anonymity,
a senior officer said: “The discussions have been going on for this
aircraft for several years; there has not been much of an action on the
deal so far. Recognising the advantage of selling to India, the two
governments are willing to negotiate much lower price for these machines
and through G2G route.”
The ministry of defence (MoD) has shown a preference for
government-to-government (G2G) deals instead of direct commercial
negotiations with companies producing armaments over the last couple of
years. Some of the major G2G deals include procurement from Russia, US
and France.
Sharing his view about the G2G route for defence procurements, an
industry source said: “The inter-governmental agreement (IGA) between
two governments, besides maintaining transparency, it also ensures that
there are no unnecessary delays in closing deals.”
As reported earlier by FE, a senior diplomat had said that “Japan is
offering the amphibious aircraft for manufacture in India under Prime
Minister Narendra Modi’s
indigenisation drive. There have been intense discussions between two
sides on reviving the deal that had been put on hold, as both sides have
tried to iron out issues that forced the government to push it back. ”
Hopefully, before the annual India-Japan summit, some decisions will
be taken regarding this, said the officer. Given that the navy’s
requirement for the search and rescue can only is limited, the two sides
are looking at the possibility of exports to third countries. Tokyo has
also suggested parts for the aircraft t be manufactured in India and
setting up of MRO.
New Delhi has been keen on acquiring the ShinMaywa US-2i amphibious
aircraft from Tokyo as part of their expanding bilateral strategic
partnership, with both nations wary of China’s assertive behaviour in
the Asia-Pacific region. Earlier this year on the side lines of DefExpo
2018 in Chennai in April, Mahindra
Defence Systems, part of the Mahindra Group, signed a pact with
Japan-based ShinMaywa Industries for manufacturing and assembling of
amphibious aircraft ShinMaywa US-2 in India.
In a statement, Mahindra said that both companies have entered into
the partnership with a view to set up maintenance, repair and overhaul
(MRO) services in India and also undertake manufacturing, assembling of
structural parts & components for US-2 amphibian aircraft etc.